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Jim Wyckoff's Morning Report: Russia-Ukraine Continues to Dominate Markets

16 April 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The Russia-Ukraine crisis remains in keen focus this week. The latest developments have seen gunfire in eastern Ukraine cities, with Russian war planes buzzing the region.

The Ukrainian president has ordered his troops to regain control of the cities in eastern Ukraine that had been taken over by pro-Russia rebels. Ukraine government officials have accused Russia of instigating and even arming the protesters. There is uncertainty regarding how the U.S., the world’s only military super power, will react to the latest developments in Ukraine. As a three-day holiday weekend approaches, it will not be surprising to see the safe-haven assets see more demand and to see the market place move into a “risk-off” mode. The Russia-Ukraine crisis could escalate into an international crisis in a hurry.

Key economic data from China on Wednesday saw the world’s second-largest economy grow by 7.4%, year-on-year. That figure was slightly above the 7.3% annual growth rate expected by forecasters but still the slowest growth rate in 18 months. China construction starts in the first quarter fell by 25% and sales of homes fell by 7.7% in the same period. The Asian and European stock markets were supported on the China GDP news. China is the world’s largest consumer of raw commodities. The gold market’s plunge on Tuesday was blamed in part of worries about demand for physical gold coming out of China.

U.S. economic data due for release Wednesday includes the Federal Reserve’s beige book, weekly mortgage applications survey, new residential construction, industrial production and capacity utilization, and the weekly DOE liquid energy stocks report. Fed Chair Janet Yellen also gives a speech in New York today.

Wyckoff’s Daily Risk Rating: 7.5 (The Russia-Ukraine tensions are squarely on the front burner of the market place.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

--Jim

U.S. STOCK INDEXES

S&P 500 June e-mini futures: Prices are higher in early U.S. trading, on bargain hunting and short covering after prices
hit a two-month low Monday. The shorter-term moving averages (4-, 9- and 18-day) are still bearish early today. The 4-day moving average is below the 9- and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 1,860.00 and then at 1,867.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,840.50 and then at 1,830.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are higher early today on short covering and bargain hunting after hitting a nine-week low on Tuesday. The shorter-term moving averages (4- 9-and 18-day) are still bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is located at 3,525.00 and then at 3,550.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,496.25 and then at 3,475.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.0.

Dow futures: Prices are higher in early U.S. trading today, on short covering and bargain hunting after prices Monday hit a two-month low. Buy stops likely reside just above technical resistance 16,300 and then at 16,350. Sell stops likely reside just below technical support at 16,205 and then at 16,150. Shorter-term moving averages are still bearish early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Wyckoff's Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are lower early today on profit taking after prices hit a contract high Tuesday. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 134 30/32 and then at the contract high of 135 10/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 134 11/32 and then at 134 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

June U.S. T-Notes: Prices are lower early today on profit taking after hitting a six-week high Monday. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 124.20.5 and then at 124.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 124.11.5 and then at 124.00.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The June U.S. dollar index is weaker in early trading. The bears have the firm overall near-term technical advantage. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 79.915 and then at 80.000. Shorter-term support is seen at overnight low of 79.715 and then at this week’s low of 79.620. Wyckoff's Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

May Nymex crude oil prices are higher in early U.S. trading and hit a fresh contract high overnight. Bulls have the solid overall near-term technical advantage. In May Nymex crude, look for buy stops to reside just above resistance at $105.50 and then at $106.00. Look for sell stops just below technical support at $104.00 and then at the overnight low of $103.68. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were mixed in overnight trading. Soybeans hit a new for-the-move high, while wheat and corn are slightly lower.
Weather in the central U.S. has been cold and wet the past few days as U.S. corn planters wait to roll. This is bullish for corn. The cold U.S. weather and the heightened Russia-Ukraine tensions are bullish for wheat. Soybeans are seeing tight U.S. stocks and good worldwide demand. Technically, wheat bulls have the technical edge. Corn and soybean bulls have the firm near-term technical advantage.

TheCropSite News Desk

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.



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